FxGrow Daily Technical Analysis – 26th Oct, 2017
By FxGrow Research & Analysis Team
EUR/USD Pushes Higher, Seeing Draghi Hawkish
EUR/USD has been actively bullish since yesterday rallying from 1.1753 low recording 1.1817 high. Today, the pair extended yesterday's action and pushed higher at 1.1836 with expectations for more pips as 5-EMA crossed with 10-EMA from below.
Today market is expecting a hawkish statement as Super Mario Draghi crosses wires at 12:30 PM GMT. On the other hand, rates are highly expected to be left unchanged at 0% point basis, which turns all the attention to the ECB's Gov.
Draghi has mentioned previously in Sep that tapering with QE program and details will laid out in Oct as the ECB holds a press conference. At the moment, ECB is currently running QE purchasing at 60B value. Now the question comes is how much or at which pace will Draghi slow down the amount and setting specific dates.
Note expectations are between 25B and 40B reduction.
Logically, any tapering with QE as reduction should be taken positive and EUR/USD should rally as the event itself is highly anticipated since a long time of period. But still, market may not digest the details and below are possible scenarios that should take action.
First scenario which most likely, ECB will reduce monthly bond purchasing at 30B value and commit to buying bonds till Sep 2018 with a guidance. (Positive for EUR/USD).
Second scenario which is likely. ECB will cut bond purchasing by 30B and commit the QE program till Jun 2018. ( Less positive ).
Third scenario which is possible that ECB could cut monthly bond buys by 20B and commit to buying bonds to June 2018. ( Negative for EUR/USD)
Last and fourth scenario which is unlikely, ECB will cut monthly bond buys by 40B and commit to buying bonds to Sept 2018. ( Strongly positive for EUR/USD).
Technical Overview EUR/USD
Current price: 1.1822
Closing price: 1.1812
Target price: None
Resistance levels: 1.1830, 1.1860 , 1.1907*
Support levels: 1.1760 , 1.1730? , 1.1680-70
Trend reversal price: 1.1909
General comment: Comment Overall the market is bearish and penetration under Monday's low suggests a selloff under the last 1.1780 swing low. Near term trade is showing corrections and may again work sideways higher today. A surge over 1.18945 voids the bear alignment. However, a close over 1.1907* is the key to start a reversing turn and sustained climb to higher levels.
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